SCOTUS for law students: A campaign finance face-off (sponsored by Bloomberg Law)

Posted Fri, May 18th, 2012 11:23 am by Stephen Wermiel

The Supreme Court is accustomed to having the last word on matters of constitutional interpretation. But in the application of First Amendment free speech principles to restrictions on corporate campaign spending, the Montana Supreme Court invoked one of the lessons from first-year law school – that facts matter – to uphold state restrictions on independent corporate spending in elections. Now, that court’s December 2011 decision appears to have set the Montana court on a collision course with the U.S. Supreme Court, which will soon decide whether (and how) it will review the ruling.

In January 2010, the Supreme Court ruled in Citizens United v. Federal Election Commission that corporations and labor unions have a First Amendment right to engage in independent spending to influence elections. By a vote of five to four, the Justices overturned their own precedents and struck down a portion of federal election law that prohibited corporations and labor unions from spending their own funds directly to urge support for political candidates.

The Citizens United ruling has sparked a huge controversy about the role of corporate money in politics, about deference to legislative judgments, and about the role of the Supreme Court in our democratic system. This controversy and the related clash over the subsequent Montana ruling have direct bearing on courses in constitutional law, First Amendment, election law, and perhaps federal courts.

Under the federal Bipartisan Campaign Reform Act of 2002 (better known as McCain-Feingold after its chief sponsors, Senators John McCain of Arizona and Russ Feingold of Wisconsin), corporations and unions could make campaign expenditures through separate funds, called political action committees (PACs). Those PACs were limited in where they could get their funds and could not spend the money of the union or corporation itself. Under the 2002 law, the PACs could donate to candidates and could make independent expenditures to support candidates, but these were subject to limits, regulations, and disclosure requirements.

Citizens United dramatically altered that aspect of the campaign finance landscape. The Court ruled that corporations and unions are entitled to the protection of the First Amendment for political speech and that restrictions on the ability of corporations to speak directly, rather than through separate PACs, are unconstitutional. Finding that the restrictions must survive strict scrutiny – that is, must be narrowly tailored to achieve a compelling interest – the Court rejected the Justice Department’s argument that the law was essential to prevent corruption in the political process. Writing for the majority, Justice Anthony Kennedy explained that “[t]he fact that a corporation, or any other speaker, is willing to spend money to try to persuade voters presupposes that the people have the ultimate influence over elected officials.”

Critics of the ruling say it has opened the floodgates to allow corporations to spend hundreds of millions of dollars to influence federal, state, and local elections, overwhelming the candidates and voters alike. They accuse the Supreme Court of abandoning a century of precedent that limited the protection of the First Amendment to individuals. They fault the Court for scrapping its own precedents and substituting its own judgment for that of Congress about whether corporate funds harm or have a corrupting influence on elections.

Defenders of Citizens United say the influence of corporate funds has not had a harmful impact on voters and is offset somewhat by the expenditure of union funds. Moreover, they contend, the Supreme Court has made the application of First Amendment principles to political campaigns more rational and consistent. And they argue that neither Congress nor the executive branch provided any hard evidence of actual corrupting influences from campaign expenditures, while on the other hand corporations have a valuable role to play in political debate and public discourse.

This controversy has produced voluminous commentary, both legal and political. It has deepened the political divide in Washington and around the nation. It has fostered renewed debate about whether the Supreme Court is too motivated by political outcomes, even rekindling the discussion of Bush v. Gore, the 2000 ruling in which the Court decided the outcome of the presidential election by halting a partial Florida ballot recount.

Enter the Montana Supreme Court. Montana law is, in some ways, where federal law was before Citizens United. Originally passed by the voters of Montana in 1912, the state law now prohibits corporations from spending money to support or oppose candidates. But under Montana law, separate PACs can be created to contribute to candidates or to make independent expenditures; these PACs may be funded only by contributions from shareholders, employees, or members of a corporation.

The law was challenged by several corporations and associations. Deeming the case governed by Citizens United, the state trial court declared the Montana law unconstitutional. But the Montana Supreme Court took a different approach and upheld the law by a vote of five to two. When the law was passed, the Montana Supreme Court reasoned, there was abundant corruption in the state, including bribery and corporate control of the power of government. In the state court’s view, this was more than enough to create a compelling justification in 1912, and today Montana remains “especially vulnerable to continued efforts of corporate control to the detriment of democracy.”

In other words, the Montana Supreme Court is saying that the facts matter. Even if the facts were not sufficiently established under federal law in Citizens United to show that corporate spending in campaigns is corrupting, facts showing undue influence have been amply demonstrated in the Montana case, which in the appeal to the U.S. Supreme Court is called American Tradition Partnership v. Bullock.

Ironically, perhaps the strongest criticism of Citizens United came from one of the dissenting Montana Justices, James Nelson. While conceding that the Montana law should be clearly found unconstitutional as a matter of precedent under Citizens United, he nonetheless strongly condemned the Citizens United ruling, concluding at one point that if the decision puts individuals and corporations on the same level, “it is truly ironic that the death penalty and hell are reserved only to natural persons.”

What happens next? The challengers to the Montana law, who are now seeking review in the U.S. Supreme Court, do not accept the distinction between the Citizens United decision and the Montana case as a valid difference. They argue that in Citizens United, the Court decided as a matter of law, not as a matter of fact, that independent corporate expenditures do not corrupt the electoral process. They characterize the Montana Supreme Court ruling as a thinly veiled attempt to get the Supreme Court to reconsider Citizens United.

Indeed, they suggest that the Montana law is so obviously unconstitutional, and the state court ruling so obviously wrong, that the Supreme Court could grant certiorari and reverse the Montana Supreme Court ruling without hearing argument or receiving full briefing. This suggestion is supported in a number of friend-of-the-court briefs filed by Senate Republican leader Mitch McConnell of Kentucky, the U.S. Chamber of Commerce, and the Citizens United organization.

The Supreme Court has already weighed in on the case in an interim but revealing way. In February, the Justices stayed the Montana ruling, thereby allowing corporations to continue spending on political campaigns in Montana as if the state law did not exist. The stay will remain in effect until the Justices decide what to do with the petition.

With the stay order, Justice Ruth Bader Ginsburg, joined by Justice Stephen Breyer, wrote a brief but telling separate statement. Justice Ginsburg said two things were abundantly clear: first, the Montana Supreme Court must follow the ruling in Citizens United and did not do so; and second, the expenditure of funds in Montana and elsewhere since 2010 calls into question the Court’s assertion in Citizens United that corporate campaign spending does not bring about corruption.

The Montana Attorney General has until May 18 to file a response to the petition and to answer the suggestion of a reversal without argument. The Court likely will not decide until June (at the earliest) whether it will in fact grant the petition and reverse the Montana Supreme Court without argument, issuing a written decision and – almost certainly – dissents. Alternatively, the Justices could grant the petition and set the case for oral argument next fall. An argument on Election Day might be nice.

Upcoming Oral Arguments

3/31Kimble v. Marvel Enterprises, Inc. Whether the Court should overrule Brulotte v. Thys Co., which held that “a patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se”.

4/20Johnson v. United States Whether possession of a short-barreled shotgun is a violent felony, leading to a longer prison term as a career criminal.

4/21McFadden v. United States A federal prosecutor’s duty to prove that a suspect knew that a substance was an illegal substitute for a banned drug.

4/22Horne v. Department of Agriculture The federal government’s duty to pay raisin growers for an order requiring removal of part of a year’s crop from the market to stabilize prices.

On Monday afternoon Justices Anthony Kennedy and Stephen Breyer testified before the House Appropriations Committee. The purpose of the hearing was to discuss the Court’s budget for the next fiscal year and the federal judiciary, but the legislators also took full advantage of the occasion to touch on other topics as well.